Hammer Time

Just because I've always wanted to post this.

But before we get to "Hammer Time", a couple of other items first.

Two weeks ago, we characterized the April NFP #s as the gift that keeps on giving, just like The Jelly of The Month Club. http://www.tfmetalsreport.com/blog/4713/it-edward More evidence of that has appeared over the past few days as the 10-year note has completely fallen out of bed.

Once again, this move in rates can be traced to the BLSBS report of Friday, May 3. Since then, the note has fallen four points and now rests near support at 130, which corresponds to a rate of about 2.15%. This level may hold but I suspect that it will not. More likely is a drop to what appears to be critical support near 127-128.

But here's the deal. There is no way, no how that The Fed is going to allow support to fail, thereby letting 10-year rates back up to 3%+. Not happening. Besides the detrimental impact higher rates would have on the U.S. budget deficit and debt, higher rates would also crush any nascent economic recovery.

Already we are seeing things slow down in the U.S. (Even that statement is nonsense because "slow down" implies that previously things had been really cooking.) Check this headline from ZH just this morning. http://www.zerohedge.com/news/2013-05-29/cash-and-tarry-mortgage-applications-plunge-fastest-rate-2009 And, as discussed last week, if the economy was booming and housing growth was robust, demand for inputs such as lumber would be soaring and soaring demand would lead to higher prices. Right? Right?? Apparently not. Here's an updated chart of the cost of lumber.

So here's what's likely to happen in the weeks ahead:

  • The 10-year note may fall a bit farther but then it will bounce and begin to rebound
  • Signs that the U.S. economy is weakening will get more mainstream press coverage
  • This will likely begin with a May NFP next Friday that comes in "weaker than expected"
  • A continuation or even increase of QE will shove stocks even higher
  • Gold and silver will finally stabilize and begin trending higher, the start of a summer rally

But first, Hammer Time. Now don't get all freaked out. I'm not talking about another big drop. However, recognizing that all of this silly "tapering" talk will soon be a thing of the past, the metals will likely be shaken out one last time over the next week or so. How much? I would not be at all surprised to see gold trade down toward $1350 again and perhaps bounce off of there a couple of times. Silver could see at least a drop to $21.50 if not a double bottom near $21.

The most interesting thing about the two charts below is the contrast. Gold and silver almost always trade in tandem, tracing out nearly identical chart patterns. But look below. Gold is in an "ascending triangle" while silver is in a "descending" one. Isn't that odd? Looking at these, I'm guessing that the bottom will soon drop out for silver and we'll get the drop toward $21.50, and maybe $21, that I mentioned above. Hammer time.

So, anyway, we'll see. The nice thing for me about predicting a drop in price is that, when I'm wrong, no one is pissed off. Maybe I should do this more often?

One last thing, someone mentioned yesterday something about the CAD and how it's down since QE∞ began. I read that and thought, "you know, that IS pretty funny". So here it is, in all it's glory. If ever there was a chart that showed you how utterly FUBAR the current markets have become, it's this one. Since the time that The U.S. Fed embarked on a printing regime where they are actively creating from whole cloth $85B/month in new greenback, The Canadian Dollar (which is not being actively devalued) is down over 7%! HOLY REALITY DISCONNECT, BATMAN! I know that I shouldn't be laughing. I have a lot of Canadian readers and I should have some sympathy but this is just incredible.

OK, that's all for now. Have a great day!

TF

 

 

220 Comments

SRSrocco's picture

ROYAL CANADIAN MINT RELEASES UPDATE

Well, it looks like Gold & Silver Maple Leaf sales increased substantially over last year.  The Royal Canadian Mint updates their sales figures on a quarterly basis.  I just put a new post titled:

Gold & Silver Maple Leaf Sales Increase in a Big Way

http://srsroccoreport.com/gold-silver-maple-leaf-sales-increase-in-a-big-way-2/gold-silver-maple-leaf-sales-increase-in-a-big-way-2/

I believe this will be a NEW RECORD YEAR for sales of both the Silver Eagles & Maples.

Road_Scholar's picture

Home Prices are rising

on the high-end homes.  It sure feels like a repeat of 2006 times.  However, this time the vacancy in office and business space is now VERY HIGH.  I can't believe how people fall for the same things over and over.

Maybe, it's just "smart" funds leaving equities and going into "real" assets?!  Even at high prices, homes are better than overpriced paper.  Although, PMs are the best store of value in an over-valued, disconnected, soon to crash world...

El Dubya's picture

MC Hammer lost his fortune

MC Hammer lost his fortune without investing in precious metals.

jmcadg's picture

4th surely not!

Never before

philly's picture

Top 5...a shame that didn't

Top 5...a shame that didn't translate into raffle results! As they say, some days you're the pidgeon, some days you're the statue!!

jmcadg's picture

jmcadg

Turd, would you not agree that the NFP numbers will be a cast iron smash on the metals?

Don't cast a clout until May (NFP numbers) are out!

Watcher's picture

All eyes on June delivery.

All eyes on June delivery.

AgNovice's picture

There's Gold in them thar hills!

Gold!

I'm in Columbia, California - Gold Country - chaperoning 4th Graders. We'll pan for gold, see the blacksmith and experience (or at least see) a little of the rugged living conditions of old.

DeaconBenjamin's picture

Indian Mutual Funds say investments won't be hit by gold loan ba

MUMBAI: Reserve Bank of India's decision to ban banks and NBFCs (Non-bank financial companies) from extending loans against gold exchange-traded funds and gold mutual funds will not have any material impact on these investments, industry players have said.

"Leveraging gold ETFs to buy other asset class or more gold is not a distinct phenomena here. Most of the investors invest in gold ETF kind of products for portfolio diversification," IDBI Mutual Fund chief executive Debasish Mallick told PTI here today.

Yesterday, the Reserve Bank had asked banks and NBFCs not to extend loans against units of gold exchange traded funds (ETFs) and gold mutual funds in a bid to contain bullion imports, which is one of the major factors behind the high current account deficit which is estimated to cross 5 per cent of GDP in 2012-13 fiscal.

Mallick also said that when the outlook seemed to be bearish on the gold prices front, investors would be less inclined to get loans against their ETF holdings. Assets under management (AUM) in the gold ETF segment stood at Rs 11,648 crore by the end of March quarter.

While holding of companies stood at Rs 6,345 crore, retail investors were second with a holding of Rs 3,124 crore in the gold ETF category with rest coming from banks, foreign institutional investors and wealthy individuals.

Referring to this issue, a top official from Quantum Mutual Fund said leveraging through ETF was very less in domestic market. "Unlike developed economies, leveraging of gold ETF units is very small. So, I don't think, investors would shy away from investing in this segment due to the RBI decision," Quantum Mutual Fund chief executive Jimmy A Patel said.

Patel also said that despite the fall in gold prices, there is no significant outflows. Gold price is hovering around Rs 26,000 per 10 grams now from the peak of around Rs 32,000, prompting many investors globally to liquidate their gold ETF holdings.

Meanwhile, another fund manager from a mid-size fund house said that though RBI's decision would not have major impact on retail investors, some institutional investors might get impacted due to this step.

Mr. Fix's picture

Top 10!

smiley

Dobocop's picture

Canadian Dollar Down

Many contributing factors.

- BOC stands pat on interest rates today.

- A Housing bubble that is slowly deflating and IMO about to burst on the next economic shock.

- Hedge fund shorting of the cdn dollar.

- Resource driven economy, Oil, Lumber, etc all down.

ag1969's picture

Chuck Norris....

....can touch MC Hammer.

Just A Regular Guy's picture

@Turd

Great write up mate, 1000 hat tips!

Peace

DeaconBenjamin's picture

Gregory III Laham: "The future of Syria cannot be built on destr

The European Union fails to renew the ban of weapons supply to the Syrian opposition. Britain and France are ready to send arms to the rebels. For the Catholic Patriarch of Antioch "There are no winners with the war." The invitation to pray for the peace conference in Geneva scheduled for next June 10.

Damascus (AsiaNews) - "The future of Syria cannot be built on destruction. There are no winners with war. The Church is for reconciliation and dialogue. We encourage prayer for the success of the conference on 10 June in Geneva so that all parties, government and opposition, can travel the road to peace. " Gregory III Laham, patriarch of Antioch all the East, of Alexandria and Jerusalem of the Melkites says to AsiaNews.

The prelate's appeal comes after the failed agreement between the European Union countries on the renewal of the ban on the supply of arms to the rebels, which expired last night. This has prompted Britain and France to renew pressure for military support to the rebels. William Hague, the British Foreign Minister, said, "that so far no EU country has plans to arm the rebels." The end of the embargo is a move to intimidate Assad. However, the diplomat did not rule out sending weapons in the coming months. Ahead of new decisions, the "momentary" end of the ban, the announcement facilitates the illegal entry of weapons in Syria.

Gregory III says that such a situation of pain, hatred and conflict between factions spurred by the continuous supply of arms to the rebels and the regime cannot continue indefinitely. "The world - he says - must understand that wars do not put an end to violence. I have personally experienced the clashes between Israelis and Palestinians in the Holy Land and the current one between Sunnis and Shiites in Syria. I can testify that only the position of reconciliation, peace and rejection of hatred given by the gospel can lead to a lasting solution. "

According to the patriarch there is still room in Syria for values ​​such as good and solidarity between people of different faiths and factions. "Even where there is no violence - he explains - people live with the constant fear of continuing war, but try to live their daily lives." In many cities, such as Damascus and Aleppo, there are episodes of solidarity between Christians and Muslims, without ethnic or political distinction. "The Patriarchate - says the prelate - welcomes displaced people and refugees fleeing from the regions most affected by the conflict and supports them through the efforts of the volunteers of Caritas and many Christian and Muslim families." (S.C.)

Southern Cross's picture

Stay Balanced

"He who loves silver will not be satisfied with silver"

                                                                        Ecclesiates 5:10

Things on this earth will not satisfy.

Human nature is always to want more, bigger, better, faster, fancier, cooler.  
 

hai's picture

World Gold Council’s Grubb: ETF Sales Sending Gold From West To

World Gold Council’s Grubb: ETF Sales Sending Gold From West To East, Mine Production Will Limit Downside

Grubb makes some good points in this interview. He said that

"There is a possibility that ETFs have become a source of physical gold, and therefore the gold is going eastward. Because if investors are selling at a small premium in the West and getting out of their ETF positions, the gold can then be redeployed to meet this massive amount of consumer demand at a big premium in Asia. "

http://www.hardassetsinvestor.com/interviews/4846-world-gold-councils-grubb-etf-sales-sending-gold-from-west-to-east-mine-production-will-limit-downside.html

SilverSurfers's picture

Miss

top ten, oh well, no top 10 turder today. But I absolutely love the title and vid. COOL BEANS.

OK rocket jocks, needs a little help here with the computer on line tools.

page 6 (for retreiving two threads from lemetropolecafe in 2008-9 time period)

FUTF Tuesday

Help II

Hunt brother's picture

Lumber is not hoarded...

Lumber warps and does not store well. Oil and copper store in salt domes and warehouses.

Real assets that store are defacto  currency. The commodity bears do not grasp this concept.

Lumber reflects true supply and demand. Lumber is lock limit down again today at 277.

The housing recovery is a dead cat bounce.

Silver Monkey's picture

10 year Bond VORTEX!?

Speaking of the 10-year, my favorite contributor at Zerohedge, Bruce Krasting  came out with this very interesting piece recently relation to the very subject of this post:

Bond Vortex In The Works?

  "I see this evolving story as a possible turning point. The key CB's will have gone from Offense to Defense."

SilverSurfers's picture

Computer

search came up with only one file, some may get a kick out of a flash back, when on 4/1/09 yours truly fingered china as the secret buyer, they fessing up, 12 days later, got caught red handed. Still have mental images of Berni lo on Asia Confidential airing my questions from laguna beach to a so-called gold expert, na there is no evidence of china buying gold. Freaking Charlatan.

Le Patron, (GATA Bill Murphy)
I am sorry for being so slow and not getting it. I have often wondered why China has a fixation on getting Taiwan back from the nationalists. I have previously thought it was just and only cultural, to preserve a 1000 year history of terrestrial integrity. I have also wondered why China had been selling for the past 50 years tones of silver, yet has so little Gold in their FOREX reserves. I have also wondered why Taiwan is one of the leading countries with huge gold reserves, for such a tiny island. I was talking with a Taiwanese national the other day, and he informed that when the nationalist fled mainland China at the end of the Chinese civil war between the Nationalist and the Communists, the nationalists took with them to Taiwan Chinese historical artifact treasures and a golden hoard, but could not carry nor destroy the vast silver stock pile. Hence, the reason for the current disparity between the gold in Beijing and Taipei. Rumor has it, that China has recently purchased five more Russian top-of-the-line attack submarines. I have often belittled those who claim that wars are made for gold they seek. Putting these things together, it seems there is validity to this claim, and I have reconsidered. China wants it treasures and gold back, and are preparing for war to get it back.
On another note, the following may be of interest.
It Aint Lebanon, Its Aint Oil, hmmmmmm,
Its COMEX Silver and the World Bank Gold.
Someone intelligent has to notice the 33ct and 41ct rise in Silver the last two days. Someone intelligent has to notice the 640$ gold breakout and the pass through of 650$ gold. I got a little secret for all those commodities pundits out there, IT AINT LEBANON. It called supply and demand. COMEX silver stock dropping below 100Moz first time this century. Bank of Nova Scotia bank sucking silver out of COMEX to feed the SLV ETF, Silver users getting nervous taking delivery of Silver to protect themselves from the inevitable silver shortage. The Washington Gold agreement sales dropping below 500 tones for the first time with a 1500 ton supply/demand deficit in gold. World bank gold reserves as percentage FOREX reserves dropping with reduced sales, leading to $3000/oz gold. Silver supplies trending to a COMEX default leading to $100/oz silver. The concurrent failure to continue to release Gold from world banks and a COMEX default, in this interconnected world economy, could be the trigger, that sends the almighty dollar crashing in value. Wake up pundits, the trends are right before your eyes. Why the high gold and silver prices? Well, IT AINT LEBANON!!!, IT AINT OIL!!!, Its FUNDAMENTALS!!! Its COMEX Silver!!! Its World Bank Gold!! Get it? If not, get some now. Got worthless paper or Gold and Silver? Yeap, 1000$ gold and 17$ silver by the end of the year is definitely in the cards.
Derrick

U2, the gold, for the wars they wage ..... how true.

Freakin A, at least one is ready FOR WAR, ITS HAMMER TIME!!!!

JY896's picture

Blast from the past... see if you can spot the guest appearance

...by John Thain's office decor in the clip. From 2009 Superbowl, when I SHOULD HAVE realized it was time (or even past time) to start buying... sigh....

Cry Me A River's picture

APMEX DROPPED THEIR JUNK SILVER PREMIUMS AGAIN

After 14 days at $2.50, APMEX has dropped their junk silver premiums to $2.00. When this drop was posted last time, I guessed they were anticipating higher silver prices and stabilizing demand. Their inventory definitely reflects higher levels of junk silver, therefore, I think the demand side has settled down a bit. We shall see if higher prices are ahead. It would be very interesting to see a higher net short level announced by the Commercial Banksters in this week's COT.

Here Are The Charts:

$17446/715oz = $24.40 = $2.00 Over Their Silver Bid At The Time Of This Posting:

Urban Roman's picture

Prehaps ...

Could it be that the CAD$ is down because lumber is down? 

The fake "housing recovery" is a lame attempt to paper over the fact that many commodities are having a spot of deflation. Hard assets like land and coinage metals should hold up pretty well, however...

Dr Jerome's picture

Backwards markets

These backwards physical markets are bending my brain. Taking advantage of this large dip, I thought I would sell enough AG to show a 3K loss to the IRS. So I find myself hoping price drops more so I don't have to sell as much AG cause I don't want to part with it. According to Turd, I should wait til Friday. But then I don't get as much cash to buy back anything.
Just weird.

Excalibur's picture

Off topic, but too good not to share

Written by by a terminally ill woman for her children:



1. What you put out comes back all the time - no matter what.

2. You define your own script. Don’t let others write your script for you.

3. Whatever someone did to you in the past has no power over the present. Only if you give it power.

4. When people show you who they are, believe them the first time.

5. Worrying is wasted time. Use the same energy for doing something about whatever worries you.

6. Whatever you believe has more power than what you dream or wish or hope for. You become 

what you believe.

7. If the only prayer you ever say is ‘Thank you’ then that will be enough.

8. The happiness you feel is in direct proportion to the love you give.

9. Failure is a signpost to turn you in another direction.

10. If you make a choice that goes against what everyone else thinks, the world will not fall apart.

11. Trust your instincts. Intuition doesn’t lie.

12. Love yourself and then learn to extend that love to others in every encounter.

13. Let passion drive your profession.

14. Love doesn’t hurt. It feels really good.

15. Every day brings a chance to start over.

16. Doubt means “don’t”. Don’t answer. Don’t rush forward.

17. When you don’t know what to do, be still. The answer will come.

18. Trouble doesn’t last always.

19. This too shall pass.

20. I will act with the intent to be true to myself

Cry Me A River's picture

Thanks TF For This Mention Regarding The Ten Year Note Yield

I was just about to post another update on the ten-year note, and I wanted to thank TF for mentioning me in his main blog in "POST BERNANK POST"

"Speaking of the CoT, one of our resident experts on the subject is JakeBlues. Jake posted a different sort of comment to the earlier thread and I thought it deserved attention here. Read this and note the very interesting correlation Jake discovered between the yield of the 10-year note and silver prices. http://www.tfmetalsreport.com/comment/314580#comment-314580"

Here's an up dated chart:

We Now Can Clearly See The Yield Has Established Itself Above The 3-year MA And Has Shown A Drop Below My Break Point. The Significance of This Is Explained In That Original Post. Since Then, Although Silver Prices Have Not Risen Significantly, They Haven't Trended Down Below The Last Low Either. 

I Believe, This Is Signaling A Warning To Anyone Seriously Thinking The Ben Bernank Is Considering Exiting QE. The Market Is Too Vulnerable and The Cost Of Debt Service Will Rapidly Rise.

If Anything, He Should Be Considering More QE. This Is The Only Thing Propping Up The Stock Market.

The Watchman's picture

World Gold Council:

Asia gold demand to hit quarterly record, absorb ETF outflow-WGC

Wed May 29, 2013 4:00am EDT

* India to import around 350-400 tonnes of gold in Q2

* Asian markets' gold demand to hit record highs in Q2

* Asian physical demand to absorb ETF outflows in 2013

By Clara Denina

LONDON, May 29 (Reuters) - Asian gold demand from this April to June will reach a quarterly record as bullion consumers in the region take possession of supply freed up by selling from exchange-traded funds (ETFs), the World Gold Council (WGC) said on Wednesday.

Gold prices fell to their lowest in more than two years at $1,321.35 an ounce in mid-April on signs of economic improvement in main markets and fears that central banks around the world could start to curtail their bullion-friendly policy measures.

The move scared investors in the West, triggering a sharp liquidation of speculative and ETF positions. But lower prices also prompted strong physical demand from price-sensitive countries such as India and China, which together account for more than 50 percent of consumer demand for bullion.

"Asian markets will see record quarterly totals of gold demand in the second quarter of 2013," WGC Managing Director Marcus Grubb said.

"Even if ETF outflows continue in the United States, it is quite likely that the gold previously held in ETFs will find a ready market among Indian, Chinese and Middle Eastern consumers who are taking a long-term view on the prospects for gold."

The council expects Indian gold imports to reach 350-400 tonnes in the second quarter, 200 percent higher than a year earlier and almost half of last year's total imports. This also compares to imports of 256 tonnes in the first quarter of 2013.

"We now definitely expect Indian demand to come in at the upper end of the 865 tonnes to 965 tonnes range that we had previously forecast for 2013 because of the effect of what happened in April," Grubb said.

Grubb said as net imports of gold into China reached around 160-170 tonnes in April alone and physical demand shows no sign of abating, total offtake this year could reach more than 880 tonnes. This compares to a previous forecast of 780-880 tonnes.

Chinese coin and bar demand hit a quarterly record of 109.5 tonnes in the first quarter, up 22 percent, and jewellery consumption rose to 185 tonnes. India's bar and coin investment rose 52 percent to 97 tonnes over the period, while jewellery demand reached 160 tonnes, the WGC said in a recent report.

Monedas's picture

I'm not pickin' on Canada ... how could I ....Dagney is Canucka!

The Royal Canadian Mint .... releases coin sale stats .... every .... quarter .... due to the incredibly difficult task .... of keystroking the sales totals .... give me a break ..... there should be a minute by minute tally .... a "coinometer" .... there's your story .... Scirocco !        Monedas     1929      Comedy Jihad Hot Saharan Air Blast World Tour  devil

Dobocop's picture

Coupled with the OECD revising canada's growth forecast.

Revises 2013 forecast to 1.4% from 1.8% and 2014 prediction to 2.3% from 2.4%

I  predict the Cdn dollar devalues by over 20% once the Housing crisis takes hold up here.

Which is great for my stack.  Today silver is 23.43  in Cdn dollars.

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